Why Do Audits Fail Evidence from Lincoln Savings and Loan

Accounting Research Center, Booth School of Business, University of Chicago Why Do Audits Fail? Evidence from Lincoln Savings and Loan Author(s): Merle Erickson, Brian W. Mayhew, William L. Felix, Jr. Reviewed work(s): Source: Journal of Accounting Research, Vol. 38, No. 1 (Spring, 2000), pp. 165-194 Published by: Blackwell Publishing on behalf of Accounting Research Center, Booth School of Business, University of Chicago Stable URL: http://www.jstor.org/stable/2672927 . Accessed: 30/01/2012 17:52 Your use of the JSTOR archive indicates your acceptance of the Terms Conditions of Use, available at . http://www.jstor.org/page/info/about/policies/terms.jsp JSTOR is a not-for-profit service that helps scholars, researchers, and†¦show more content†¦In spite of objections from the audit firms legal counsel, U.S. District Judge Richard Bilby released to the public deposition transcripts and associated audit working papers from the civil litigation against the former auditors of LSL.2 We use these documents as the basis for our analysis. To our knowledge, this is the first study to examine audit procedures documented in depositions and working papers from litigation over the adequacy of an auditor s performance. Prior research has been unable to review actual audit procedures applied to transactions from an alleged audit failure.3 Our access to LSL s auditor s depositions and workpapers enables us to evaluate the audit procedures that were applied by LSL s auditors and the information they used. More importantly, we are able to identify the information that was not used and procedures that were not performed. Other researchers have been unable to study audit procedures associated with audit failures, in spite of the compelling importance of such an inquiry, using traditional research methods.4 Our ability to study these issues highlights the potential value of a detailed analysis of legal documents from a single case. Moreover, the current approach enables us to generate alternative pro- 2 Bilby said concerns relating to possible embarrassment from disclosure of someone s deposition testimony isShow MoreRelatedAnalysis Of The Movie The Inside Job 1474 Words   |  6 Pagesabout an inside job that included many government employees and Wall Street workers. Of course, you can decide for yourself if these people do what the documentary shows they did. As for me, the evidence is overwhelming. After a short introduction, the film starts out with the date of the stock market crash, September 15, 2008. Could you imagine going from everything being fine one day to the next day of losing your job? It seems extravagant and over exaggerated, but for some, that was what hadRead MoreStrategic Systems Audit4604 Words   |  19 PagesStrategic Systems Audit Introduction As the organizations’ business strategies are becoming more complex over time, the auditing practices have been evolving correspondingly over the last century (Bell et al. 1997, 10), from a transaction-based audit prior to 1900, to risk-based audit approach during the twentieth century to today’s â€Å"Strategic Systems Audit† (SSA) as promoted by Solomon and Peecher over the last several years to reinvent the financial statement audit. Strategic Systems Audit focuses onRead MoreFraud Triangle15238 Words   |  61 Pages
  
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